Chinese food delivery giant Meituan beats estimates, posts quarterly revenue increase of 25%
The Beijing-based company recorded revenue of 73.3 billion yuan ($10.1 billion), up from 58.6 billion yuan in the same period last year, while that on-demand delivery transactions in the March quarter increased 28.1% year-on-year to 5.5 million. This exceeded the average estimate of analysts at the London Stock Exchange Group, at 70.3 billion yuan.
Profit for the quarter reached 5.4 billion yuan, about 60 percent higher than last year’s 3.4 billion yuan.
Meituan’s Hong Kong-listed shares closed largely unchanged at HK$112.70 on Thursday, ahead of its quarterly results announcement.
“We work closely with millions of merchants and brands, penetrate deeper into the industry value chain, and actively explore innovative business models,” Wang said during the earnings conference call.
Meituan also wants to launch its services in more international markets. “In the long term, our goal is to bring our products and services to a global audience, provide better services and experiences to consumers and merchants around the world,” Wang said, adding that his company is exploring opportunities in Asia from the South-East.
The company’s core local commerce operations – the company’s cash cow that includes on-demand food and grocery deliveries, hotel and travel reservations, and merchant marketing services – saw revenue increase by 27.4 percent to 54.6 billion yuan.
In the first quarter, Meituan also expanded the coverage of its Pin Hao Fan group purchasing service to more cities on the mainland, the company said. He highlighted that an improved order shipping system and operations helped Pin Hao Fan’s peak daily order volume reach a new high during the quarter.
Its Shen Qiang Shou campaign, meanwhile, introduced discounted meals at popular restaurant chains. Additionally, the company launched marketing campaigns to drive consumer demand during the holidays and offered a wide selection of coupon and discount packages to promote successful products.
These tactics may have contributed to the growth in order volume, but they also contributed to a decline in average order value, according to a research note from Jamie Chen, an analyst at investment consultancy firm Third Bridge, published before Meituan’s results were announced.
At the same time, Meituan’s new initiatives business segment – covering its online supermarkets and community group purchasing services – narrowed its operating loss to 2.8 billion yuan from 5 billion yuan one year earlier.
